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FIs to meet on May 30 to discuss DPC issue

Domestic lenders to the crisis-ridden Enron-promoted Dabhol Power Company will be holding an exclusive meeting on May 30 in Bombay to evolve a consensus policy on defending the 2184-mw power project at Guhaghar in Maharashtra and oppose the aggressive posture taken by the US promoter Enron Corporation with the support of the foreign lenders.

Initiated by the lead-financier IDBI, the meeting would review the situation arising out the preliminary terminal notice given by the DPC to its minority partner and sole client--Maharastra State Electricity Board and firm up their stand against the aggressive attitude of foreign lenders which intended to terminate their contracts with the project, costing over $3 billion.

Foreign lenders have called a meeting of DPC lenders at Singapore on June 5 and 6 and take a decision on continuation of their support to the project. Indian institutions led by IDBI would place their consensus views and would try to convince the foreign lenders not to enforce the guarantee clause and withdraw from the project.

According to IDBI acting chairman S K Chakrabarti, there is a growing rift between the domestic and foreign lenders over extending support to the project. "We strongly oppose the decision of the foreign lenders taken on April 25 in London which led to issuing PTN by DPC."

The total exposure of domestic financial institutions to the project is Rs 66 billion of which IDBI's contribution is around Rs 21.58 billion. IDBI provided a loan of Rs 6.30 billion while extending guarantees worth of Rs 15.28 billion.

The major DFIs who have contributed to the project are IDBI, State Bank of India, ICICI and IFCI.

Expressing his hopes of sorting out the current crisis between MSEB and Enron, Chakrabarti said that majority of the foreign lenders were export creditors and are government or semi-government agencies.

"Therefore, we are also initiating dialogue with foreign governments to prevail upon their lending agencies".

It would take atleast six months to sort out the problems because the foreign lenders would have to approach DPC for making the payment and the power company, in turn, would approach the state utility for making payment.

"We hope, good sense would prevail and both MSEB and DPC would sort out the problems relating to the cost of the power."

According to Chakravarti, DPC went ahead with the PTN because it feared that MSEB would exercise the same option and put DPC under pressure.

The exposure of DFIs covered various risk-measubement factors like securities and mortgaging of plants, equipment, lands and power generation beside escrow accounts of MSEB and state government.

"Our total exposure of Rs 66 billion has given us ownership of assets valued at over Rs 100 billion with all guarantees," Chakravarti added.

UNI

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